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Product Differentiation and Public Education

William Hoyt () and Richard Jensen

Journal of Public Economic Theory, 2001, vol. 3, issue 1, 69-93

Abstract: We demonstrate that differentiation in public services can arise as a way of reducing competition among cities. Quality differentiation can be particularly relevant to the provision of education. If cities finance education through a property tax that generates "tax competition," we find that quality differentiation in education changes the amount of educational services provided. In the case of property-value maximization, this means a reduction in educational services in both the city with high quality and that with low quality. The reduction in educational services means that under reasonable conditions property values in both cities can increase. Copyright 2001 by Blackwell Publishing Inc.

Date: 2001
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Working Paper: Product Differentiation and Public Education (1997) Downloads
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